Once in a while an article about picking stocks floats by that contains enough practical information to be useful – despite the rare occurrence of this type of event. Today’s news stream brought forward an article by BusinessWeek - Stocks: The Double-Your-Money Club
The article does touch on several truths which HingeFire has outlined in the past including:
- The best opportunities are in small cap stocks for explosive growth. Purchasing mega-cap stocks will not enable your portfolio to quickly grow.
- Simply shifting through stocks looking for “cheap” is like “catching a falling knife”. It is important to use technical analysis in conjunction with fundamental valuation to find winning candidates.
- Looking for strong future revenue and earnings growth compared to current valuation is helpful. However relying on this form of bargain hunting can lead to failure when the expectations don’t play out, which is a very common scenario.